First Time's a Charm: How Founders Follow Up Successful Startups

The night that Martin Stiksel and Felix Miller got rich, they couldn't even find a cold beer to celebrate with.

The two founders had been holed up at a law office in London for hours finalizing a deal that would result in their startup, Last.fm, getting acquired by CBS for $280 million. It was after 11 p.m. when the deal was done. The air conditioner and refrigerator had turned off; whatever drinks were in the office had warmed. With little reason to linger, they took the 30-minute bus ride home and crashed for a few hours until the investor calls began early the next morning.

Their exhaustion had been years in the making. Stiksel and Miller founded Last.fm, a music discovery service, in 2000, at ages 25 and 24, respectively. For the next seven years, they invested all their time and effort into refining and growing the product, while dealing with "angry parents" who questioned what they were doing with their lives. After Last.fm was acquired in 2007, the founders stuck around for two more years, frequently flying back and forth across the Atlantic to meet with their new owners, before finally calling it quits.

"It was quite intense," Stiksel tells Mashable of his experience running Last.fm. "It was like being prime minister: You never really have a holiday. This was not something I thought I would do again."

Stiksel went into a retreat program at an orthodox monastery in Greece one week after the pair announced their departure from Last.fm. Later, he and Miller each focused on more laid back pursuits: buying a home in the country, raising a family and taking up hobbies like gardening.

It took more than three years for the founders to convince themselves to return to the startup space and all the stress that comes with it.

The long road to starting over again

Many dream of building up a company that may one day go public or be acquired for millions — or perhaps, following the jaw-dropping WhatsApp deal, billions. But those lucky enough to steer their startups to successful outcomes remotely like that end up facing another challenge: How do you follow up a successful startup? Should you even try?

The Last.fm founders aren't alone in choosing to take a prolonged hiatus. Tom Anderson, the cofounder (and face) of the original MySpace, has busied himself with travel, photography and hanging around beautiful people since the company was acquired for $580 million in 2005. Jerry Yang, the cofounder of Yahoo, has mentored many startup founders since resigning from the Internet giant in early 2012, but he has refrained from launching a new tech company of his own.

In early November, Dorothy McGivney soldJauntsetter, a travel website, to the New York news site Gothamist for an undisclosed sum. McGivney, a former Google advertising employee, spent more than five years building up Jauntsetter and had little interest in founding another company.

"I wasn't tempted to start my own company from scratch," McGivney says. "One of the biggest lessons I learned from working at Jauntsetter was how challenging running your own startup is." Instead, she joined Yieldbot, a four-year-old marketing startup, with the goal of helping it grow and finding new "mentors" to learn from.

McGivney may launch another startup one day "down the line," or she may not. "I wouldn't say it's on my to-do list to want another startup, especially after having seen how difficult it is," she says.

As Last.fm's Stiksel and Miller discovered, though, that thinking can change. During their retreat from the startup world, the pair began toying with an idea for a new company called Lumi that would take Last.fm's approach to music discovery and apply it to online content discovery more broadly. They couldn't shake the feeling that they had to do something with that idea.

"There is unfinished business that we talked about," Stiksel says. "Really, Lumi is an evolution of Last.fm. We want to prove that we can do it again."

Looking for the next big thing

Just because you succeed once with a startup doesn't mean you're guaranteed to succeed again.

"It's a mixed blessing," says Caterina Fake, the cofounder of Flickr, who later founded (and sold) her company Hunch and recently launched a new app called Findery. "A lot of things are easier: You have a lot more contacts, it's easier to raise funds and you already have a lot of people that you want to work with again."

But, she adds: "The risks are just as great."

Chad Hurley and Steve Chen may be the textbook example of founders who struggle to surpass or even match their initial success. They upended the way we view and share videos online with YouTube, which was acquired by Google for $1.65 billion in 2006. Since then, they have worked on several projects, including MixBit, Wanpai and Zeen, under their new company Avos Systems. If none of those names ring a bell, you're probably not alone. As one publication put it, the founders seem to keep "striking out." (Reps for Avos did not respond to our requests for comment.)

Then there are rare cases like Elon Musk, who somehow manages to launch company after company — each one more successful than its predecessor. Likewise, after Twitter cofounder Jack Dorsey was pushed out of the company, he approached an old friend in his hometown of St. Louis "looking for something to do." The two started mobile payments platform Square, which is now reportedly valued at $5 billion.

Paul English has followed the latter track. English sold one ecommerce company to Intuit in the late 1990s and followed that up by selling another software startup, which he founded with his brother, to Trend Micro a few years later. But he still had a desire to sink his teeth into a bigger project.

"Even though I had money in the bank and technically I had enough that I didn't have to work again, I was motivated to do something big," English told Mashable in a recent interview. "I didn't know what it was, though."

The answer came when he met Steve Hafner, the founder of Orbitz, who pitched English on a new flight and hotel booking tool. That idea turned into Kayak, a travel company that went public for around $1 billion and was later acquired by Priceline for $1.8 billion, making it by far English's biggest success. The trick, he says, is not claiming more responsibility for the success of your startup than you deserve.

"The thing I've seen some founders make a mistake about is they've been part of something that's wildly successful and they arrogantly assume that a lot of that success is due to themselves," English says. "Take inventory of your strengths and weaknesses."

For him, that meant accepting two things. English's biggest strength is recruiting, and he is at his best in the early days of a company. This helped to inform the companies he worked on prior to Kayak and it has informed the project he's working on now: an incubator that aims to help launch 10 startups in the Boston area. If one of those startups proves promising, English may focus on that in the hopes of building up another next big thing.

"It's scary," he admits. "Who knows if we will be good at it or not?"

Looking for the next anything

The choice to dabble in investing is common enough among successful founders with the financial resources, but it's a route that didn't appeal to Charles Forman.

After Zynga acquired OMGPOP, the online gaming company he co-founded, for around $200 million in 2012, a number of people told him that "you gotta invest in stuff."

"At first, I was like, I want to listen to peoples' pitches and I want to be on the other side of the table in those types of situations," Forman told Mashable. "And then I realized that that whole life is sh*tty and those people should kill themselves. I care more about my own problems and my own ideas."

Forman is the type who always likes starting over. About a year before OMGPOP was sold, he felt the operation was too big for his liking and moved on to work on a new startup called PictureLife, though he remained on OMGPOP's board. He has since turned his focus to yet another new project: writing a movie, which he describes as being like "one of those sense-of-wonder movies from the '80s."

He admits that the decision to work on a movie might look odd from the outside, and that it's "more probable" he will lose money on it, but that's not the point. He says the biggest change he experienced as a result of striking it big with OMGPOP is that the "windfall" took away his excuses not to experiment with new projects.

"You can no longer use the limitation of not having money as an excuse not to do sh*t that you should probably be doing," Forman says. "Life is short and you die faster than you wanted to. You just gotta do as many things and build as many things as you want."

The main downside to this approach, as some founders pointed out, is that you run the risk of failing in front of a much larger audience than your first time around.

"With Last.fm, we could have just walked away in the background and no one was paying any attention," Stiksel says. "When you think that people have expectations, you want to make sure you are doing a good job."

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